Which indicators tell the story?

Sunday

Oct 28, 2012 at 12:01 AM

As we are getting closer to the elections, I can't help but put my two cents into the debate. Everywhere I look, I see commercials for all of the politicians and seeing commentary about what might push the election one way or another.

As we are getting closer to the elections, I can't help but put my two cents into the debate. Everywhere I look, I see commercials for all of the politicians and seeing commentary about what might push the election one way or another.

One common theme seems to be that if the economy looks good then the incumbents have an edge. If the economy is struggling then the challengers have the upper hand. My question has to be: Is that using the numbers the government gives us — or reality?

The reason I say that is because in a recent Fox news poll, according to Peter Schiff in his newsletter on Oct. 15, 2012, all we hear in the media is that the main issue is unemployment but a poll of 1,200 registered voters says the greatest concern is inflation.

In fact, 41 percent of responders in the poll listed inflation as their No. 1 concern while 24 percent listed their main concern as unemployment (It's funny that John Williams of Shadow Government Statistics in his September 2012 report lists the actual unemployment rate, if reported the way it was reported in the 1980s, would be 22.8 percent). Also, more women than men are concerned about inflation — probably because they do a lot of the actual buying for the household.

As Schiff notes, none of these results were widely publicized, not even on Fox who ran the poll.

At CNN Money on Oct. 17, they are touting that the "misery index," made famous when Ronald Reagan was running against Jimmy Carter for the presidency in 1980, was getting lower and seems to indicate a victory for Barack Obama in November.

The misery index is a measure of inflation and the unemployment rate added together. The higher the number the worse the economy is performing. This article shows the misery index at 10. I assume that's 7.8 percent unemployment and 2.2 percent inflation. If I felt that were a real number I would expect a cakewalk for Obama and he would deserve it, particularly after what has transpired in the last five years.

In looking at the numbers and understanding that unemployment is not reported in a way that counts the chronically unemployed and indeed doesn't count if you haven't looked for a job in four weeks (according to the Bureau of Labor Statistics) then I have to assume that a method of calculating a real unemployment rate that we are all living and feeling would be closer to the John Williams number of 22.8 percent.

Even though we are told over and over again that inflation is not a problem I have to disagree. I shop once in a while and I am shocked at the prices I see in the stores. I am appalled at the price of gas which has doubled and then some in the last four years. Let's just say that even though I know the government numbers are real numbers they are presented in a way that understates the inflation that we feel when we shop and pay our bills.

If we use the 22.8 percent that I believe is closer to what we are living through and report inflation in a manner that takes into account what we are actually purchasing the misery index would probably land between 28 and 30. That would be a higher number than we saw in 1980.

The question that I have to ask myself is, "Are people going to vote on the economy based upon numbers that the government says are OK or are people going to vote with the way they feel the economy is going?"

Of course, there are many other issues that will come into play for many people besides the economy and some of these issues may be more important than the economy. If however, I had to guess whether people will vote on the economy alone I would have to give Mitt Romney a distinct advantage.

Although the president probably didn't have the largest role in the economy it is always he or she who will be credited or blamed.

Leaders may believe the adage that if you repeat something enough times people will believe it and there is adequate proof that this is true. However, when people work hard, sometimes at two or three jobs and can't make ends meet because "everything is going up" (costing more and more) that is not able to be explained away.

So get out there and vote.

Mike Savage is financial adviser and president of Savage Financial Group in East Stroudsburg, which offers securities through Raymond James Financial Services.

Never miss a story

Choose the plan that's right for you.
Digital access or digital and print delivery.